$100/door cash flow question

4 Replies

So I have seen many references to people wanting to cash flow $100 per door on a property they are investing in.  Sounds to me like a reasonable and achievable goal.  However, I keep feeling like there is a component missing here that I haven't heard addressed and that is the notion of what you had to put into the property.  Maybe if you have it 100% financed this doesn't matter.  But if you have say 20% of your own money in the property it feels like I am missing the notion of cash on cash return.  If your upfront investment of cash out of your pocket is say $1million for one unit, getting $100 would be a terrible investment.  Now obviously that is an extreme and ridiculous situation that (I hope) nobody would ever do, but it still feel to me like if you say $100 per door, it should be with a cost basis or a cash out of pocket per door of $X.  Need some notion of relative value.

If that's right, what do people usually target as $X?  Or am I just mixing and matching concepts and off in the woods?

Thanks for your feedback.

@Michael C. Interrsting points,however;most of the 100$ per door concept are in passive income. This is $100 after PITI,all bills, reserves and vacancies.. Many REI want passive income and often$100 per door per month is sufficient for investors... Everyone is different,but for a million dollar investment,I'll hope to get at least 10 units rented it one!

Which is a big reason why even being no cash in, all leverage, I don't accept less than 300/door.

There is not one answer for all RE @Michael C.   On a single-family, $100/door may be paltry in some areas, especially if one put down $20k or something.  $100/door with a DP of $500 in the midwest sounds outstanding.    I shoot for a cash-on-cash of about 20%.  Takes some of the per door variations out. The rule is to disseminate from a multi-unit, so it isn't $100/property.  It's just generic like other % rules some have.   

$200 per door, $100 is too skinny, it's very risky in case a big ticket item or eviction occurs.

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